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VIDEOQuick Hits: Air Traffic Slows to a Crawl
By
Scott Reeves Jan 30, 2009 3:00 pm
Brief scrutiny of today's headlines.
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The downturn in traffic follows last summer’s record-high fuel prices.
International cargo traffic fell 22.6% in December compared with the same month a year ago. Passenger traffic slid 4.6%.
“The 22.6% free-fall in global cargo is unprecedented and shocking,” Giovanni Bisignani, the International Air Transport Association’s chief executive officer said in a prepared statement. “There is no clearer description of the slowdown in world trade. Even in September 2001, when much of the global fleet was grounded, the decline was only 13.9%.”
For 2008, international air cargo traffic fell 4% compared with a 4.3% increase in 2007. Passenger traffic increased 1.6% in 2008 compared with a 7.4% increase last year.
In North America, demand in December fell 4.3%, outpacing the 0.7% decline in international capacity. Nevertheless, North America’s load factor was the highest at 78.1%. The international load factor was 73.8%.
US airlines have responded by cutting routes, reducing frequency of flights and grounding planes.
Domestic carriers have been hit hard, and Southwest (LUV) is the only major carrier to report a profit for the year. Airlines reporting losses for 2008 include Alaska (ALK), Continental (CAL), JetBlue (JBLU), US Airways (LCC), American (AMR), Delta (DAL) and United (UAUA).
A worldwide slowdown in both passenger and cargo traffic? It’s just another sign – as if there were any doubt - that the economy is heading south.
The outlook: Go long gloom.
No positions in stocks mentioned.
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